HEARD ON THE BEAT / REAL ESTATE

Investment Trusts Making Office Space a Hot Property

Encouraged by California's fledgling economic recovery, real estate investment trusts are snapping up any available office properties in Orange County. One of the most active REIT buyers here this year has been Menlo Park-based Spieker Properties, which has acquired everything from small-business parks to a 476,000-square-foot group of buildings in The City office complex in Orange. In recent weeks, Spieker added the six-story Liberty National Bank building in Huntington Beach's One Pacific Park and two adjacent restaurants to its portfolio. The $10-million purchase brings Spieker's total investment in Orange County to more than $100 million.

Another investment trust trying to gain a foothold here, Washington D.C.-based CarrAmerica Realty, has purchased about 475,000 square feet of office and R&D properties in the county this year, including Plaza Pacificare in Cypress. Now it is said to be eyeing South Coast Executive Center, a two-building, 166,277-square-foot complex near Bristol and the San Diego Freeway. CarrAmerica may also be looking to acquire MetLife's South Coast Corporate Center next door to create a five-building complex. Carr officials declined to comment on any pending purchases. Another real estate investment trust to lay anchor in Orange County is Glenborough Realty Trust Inc. of San Mateo, which purchased a portfolio of properties from Carlsberg Properties Inc., including the smallish Hillcrest Office Plaza in Fullerton. In coming weeks, it is expected to purchase a group of Southern California properties, including several in Orange County.

Analysts say this is just the first wave of outside investment in the county during the real estate market's recovery. As available office properties dwindle, East Coast investors will be looking to snap up companies with an existing portfolio of properties, said Stephen Duffy, director of management consulting for E&Y Kenneth Leventhal. "I think in the next six months we're going to see a tremendous amount of new capital coming into existing real estate companies," Duffy said.

Many pension fund advisors are looking for real estate companies with strong management teams that can expand through acquisition and development, he said. Once the company's balance sheet is large enough, the investor takes it public, Duffy said.

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Melinda Fulmer covers real estate for The Times. She can be reached at (714) 966-7832.